Transition to ASC Topic 842, Leases

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The purpose of this document is to illustrate a comprehensive example of how to transition from current GAAP (ASC 840) to the new lease accounting standard (ASC 842). This example uses a single lease example, rather than a portfolio of leases, to illustrate the accounting under current guidance, the transition entry to ASC 842, and go forward accounting for leases that existed at the effective date. Note: Leases entered into or modified on or after the effective date would be accounted for based on lease accounting guidance in ASC 842 (i.e. not the transition guidance).

The example below includes various illustrations of rent calculations and tables. These calculations have been condensed for illustration purposes. The calculation schedules are available in Exhibit A and Exhibit B as attachments.

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